The Small Business Administration (SBA) has announced a significant policy shift that will prevent green card holders and non-U.S. citizens from applying for loans within its primary lending program. Effective March 1, 2025, the SBA’s 7(a) program will restrict loan eligibility to only U.S. citizens or nationals who have their principal residence in the United States or its legal territories.
In a statement on Monday, the SBA clarified that 100% of the ownership of small business applicants must consist of U.S. citizens or U.S. nationals. This marks a departure from previous guidelines issued in December, which allowed for up to 5% ownership by foreign nationals or legal permanent residents.
This new rule is claimed to align with an executive order issued by President Trump in January 2025, titled “Protecting the American People Against Invasion,” intended to enforce U.S. immigration laws and enhance public safety. Maggie Clemmons, a spokesperson for the SBA, emphasized that the agency aims to foster job opportunities for American citizens. She stated, “The Trump SBA is committed to driving economic growth and job creation for American citizens – which is why, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals.”
The SBA’s 7(a) program provides vital loan guarantees to lenders that assist small businesses in various needs, including working capital, debt refinancing, equipment purchases, and property upgrades, with borrowing limits up to $5 million.
The announcement has sparked backlash from advocates for small businesses and immigrants, who argue that these changes could hinder entrepreneurship. Carolina Martinez, CEO of CAMEO Network, highlighted that immigrants are known to start businesses at significantly higher rates compared to U.S.-born residents, citing research demonstrating their crucial role in the economy. Martinez proclaimed, “The SBA’s decision to bar legal permanent residents from accessing SBA loans jeopardizes business creation and hurts the economy.”
In addition, CAMEO Network plans to collaborate with lawmakers to challenge the newly imposed guidance, characterizing it as discriminatory. Several Democratic members of the U.S. Senate Committee on Small Business and Entrepreneurship labeled the policy a “devastating attack on immigrant entrepreneurs,” expressing their concerns over the detrimental impact it may have on those seeking to pursue the American Dream.
While the SBA asserts that its goal is to prioritize American citizens in business funding, the contentious debate surrounding this policy indicates broader implications on the nation’s entrepreneurial landscape and its long-standing reputation as a land of opportunity for immigrants. The outcome of this policy change could significantly reshape the dynamics of small business ownership in the United States, as the agency aims to enhance capital availability for U.S.-based job creators.